China extends probe into US-listed tech firms
Beijing, China – Beijing widened its crackdown on its embattled technology sector Monday by announcing probes into two more US-listed Chinese companies, a day after banning ridehailing giant Didi Chuxing from app stores in the wake of its huge New York initial public offering.
The country's major internet firms wield massive influence among its army of consumers, but have in recent months had their wings clipped in a regulatory crackdown that has scuppered listings and hit business as the government seeks to rein in their influence.
The latest targets are newly listed companies Full Truck Alliance – a merger between truckhailing platforms Yunmanman and Huochebang – and Kanzhun, which owns online recruitment platform Boss Zhipin. "The overarching message here from regulators is, you need to have your house in order domestically before listing abroad," said Kendra Schaefer, at Trivium China.
The platforms have been told to stop new user registrations during the investigation 'to prevent security risks to national data, safeguard national security and protect public interest', the Cyberspace Administration of China (CAC) said.
Hours earlier, the watchdog ordered the removal of Didi from app stores following a similar probe, which it said found the firm's user data collection and use in 'serious violation' of regulations. It also cited national security for the probe, in an unusual move against a domestic tech firm.
However, there were no details on what the probe was about, nor when or where the claimed violations took place.
While it does not prevent people from using Didi as existing users can still order rides for now, it throws a wrench in its growth plans after a bumper New York IPO last week raised US$4.4bn, one of the biggest in the US over the past decade.
The ruling also comes at a time of heightened tensions between Beijing and Washington with the tech sector a key issue of disagreement.
Dubbed China's Uber, Didi was founded just nine years ago by former Alibaba executive Cheng Wei, and has gone on to dominate the country's ride-hail
ing market since it won a costly turf war against the US titan in 2016 and took over its local unit.
Shifting landscape
It now claims to have more than 15mn drivers and nearly 500mn users, while its services are available in 16 countries, including Russia and Australia.
Kevin Kwek, senior analyst on Asian financials at Bernstein, said the "trend towards tightening on tech was clear".
Didi, with a near monopoly on ride-hailing, is "the most high profile cyber security case" of its kind, University of Hong Kong law professor Angela Zhang told AFP.
But the action was lauded by state-run Global Times, which said the country must not allow 'any internet giant to become a super database of Chinese personal information even more detailed than the state'.
A top Didi executive took to social media to rebuff rumours over the weekend that the firm had been sharing domestic data with the United States, saying it would be 'absolutely impossible'.